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 Teletruth News Alert: April 2, 2008
The NMRC release and Report: http://www.newmillenniumresearch.org/ The Real Issue: How AT&T, Verizon and Tracfone, are using corporate funded think tanks and astroturf groups to hide their harms to low income families: Investigate: Raising Phone Rates on Seniors and Low Income Families Via "Harvesting"; Why "Lifeline" Service Doesn't Cover Most Costs or is the Plaything of AT&T and Verizon et al. Analysis New Millennium Research Council, a well-known stink tank, is promoting a new report, which appears to be more of a put on job for the benefit of corporate funders who want to give low income families cell phone services, paid for by government subsidies... The rational? The title says it all --- "Cell Phones Provide Significant Economic Gains for Low-Income American Households". The subplot: Create a new report without serious data so that Verizon and AT&T, the two largest cell phone providers, and others like TracFone, can get more money out of the state and federal Universal Service Fund, including Lifeline services - currently a hefty tax on all phone bills. New Millennium states: "NMRC Director John Breyault "This study has major implications for federal and state Lifeline and Link-up programs providing subsidized phone service to eligible consumers. These programs reach very few of those that they are intended to help and have a strong 'last-century' bias in favor of landline phone service.... If one of the drivers behind universal service is to insure that people have telephone access in a health or safety emergency, the phone of choice for the vast majority of Americans -- young and old, male and female, poor and rich -- is a cell phone." Their conclusion: Have the government give the poor cell phones as it will help them make $3-$11 billion. "The Sullivan report concludes that providing cell phones to the 38 percent of America's 45 million poorest households now without them -- including millions of seniors, Hispanics, African-Americans and rural residents -- could help them get work or make money worth $2.9 billion-$11 billion." The data is faulty on multiple levels, thus the conclusions. The report supposedly addresses: "Why are households in the richest country in the world losing telephone access…?" It also examines adding cell phones to Lifeline programs. Yet, there was no surveying of actual Lifeline customers or people who have stopped using their phones. Worse, there was no mention about the actual costs of wireline and/or wireless phone service. Had NMRC or the authors actually done this work, they would instead be calling on Congress et al to investigate why their "Lifeline" and other programs failed to work for low income families. Teletruth's survey work in multiple states revealed that 'Lifeline' service' isn't a low-cost solution as most of the costs are not discounted and the phone companies are getting reimbursed inflated retail rates. Worse, some states, such as Verizon PA, blocks a Lifeline recipient from even getting calling features, like Call Waiting. But that's only part of the story - The main issue of harm to seniors and low income families has been AT&T and Verizon/MCI's 'harvesting' low income families -i.e., continuously raising local and long distance rates. In fact, raising the Universal Service Fund tax simply harms the low income families who already are finding it harder to pay their bills because of continued rate increases that are also taxed USF fees. Even the methodology is problematic. For example, the report is based on a telephone-based survey and an online survey of TracFone users... Yet the topic is to examine 'low income families without cell phones'. Thus, the survey requires the person answering the survey to already have a phone. The Report has some funnier moments. For example, the authors claim that cell phones are better for emergencies than a wireline phone. "…cell phone is 'extremely important' for 'emergency' use, and overwhelmingly prefer a cell phone to a landline phone as a security blanket." Ironically, the major data comes from an online TracFone survey. The company's terms and conditions state in case of an emergency--locate the nearest landline and call for help. "Do not rely solely on your TRACFONE in an emergency situation. In an emergency, locate the nearest landline phone and call for help." But the most troubling issue is that the report, targeted at getting cell phones included as part of Universal Service and Lifeline, is an industry report. We found that TracFone, one of the sponsors of the survey work, was a client of "Issue Dynamics", who runs New Millennium Research Council, and it has been part of other skunkworks campaigns including "Keep USF Fair", as well as a sponsor of Alliance for Public Technology, another astroturf group. New Millennium claims they did not fund the report. Who did? How much did Tracfone pay New Millennium to market and lobby for the report? Even the PRNewswire release comes from New Millennium. In short, this report doesn't pass the smell test and the astroturf group putting out the report should also be questioned for their serious lack of transparency. Let's go through the issues a) New Millennium's astroturf status as a 'stink tank', Tracfone Ties. b) Major increases to the cost of local and long distance service c) The failure of Lifeline service d) The failure of the report's data and analysis.
A) New Millennium's Astroturf Status As A 'Stink Tank', Tracfone Ties. . New Millennium Research Council is a corporate-funded organization designed to make the case for its funders. We focused a series of articles about this group and others in our Harvard Nieman Foundation for Journalism Watchdog project columns. http://www.niemanwatchdog.org/index.cfm?fuseaction=background.view&backgroundid=00208
The group also claimed it was legitimate in a rebuttal which we answered: http://www.newnetworks.com/nmrcresponse.htm We bring this up because it is clear that the intention of this report is to get more money for cell phone providers via government funding. Obviously, if New Millennium is getting involved -- probably paying for press, media, lobbying, if not direct ties to the author, it benefits their customers. And yet, New Millennium claims that they are independent. "Released by the independent New Millennium Research Council (NMRC) think tank," There are also multiple ties to TracFone, one of the report sponsors. According to Open Secrets.org, TracFone was a client of Issue Dynamics, the organization that created and manages NMRC. http://www.opensecrets.org/lobbyists/client_reports.asp?year=2003&txtname=Tracfone+Wireless TracFone is also a sponsor of another Issue Dynamics run group, Alliance For Public Technology, another astroturf group in DC. And it is the financial sponsor of Keep USF Fair, a skunkworks group with a stellar array of other astroturf and co-opted groups, from LULAC and APT, to AAPD and other groups. More in Keep USF Fair et al http://www.teletruth.org/USF.html If New Millennium actually cared about telecom issues for low income families, maybe it should put out a report on the harms AT&T and Verizon rate increases are causing. B) Major Increases to the Cost of Local and Long Distance Service. Low income families are under attack by AT&T and MCI/Verizon. The largest group of low income, low volume customers are Seniors, who have been mostly loyal customers, only to find their trust misplaced. Harvesting Customers. Over the last five years, Verizon/MCI and AT&T have been raising local and long distance rates, targeting seniors, loyal low income families. This was a plan laid out in the merger documents of AT&T-SBC and Verizon-MCI --- After the mergers they simply raised rates until the customers either left or now continue to pay through the nose. AT&T's current basic long distance rate is $.42 a minute; MCI is $.35 a minute, not counting the numerous other charges. Since phone bills are unreadable, most customers just pay their bills and never understand why their bills keep increasing. To read more about harvesting of AT&T and MCI customers: http://www.newnetworks.com/attmciharvesting.htm And this is not simply about long distance service harms. Verizon and AT&T have been on the attack to raise local rates as well. A report on local and long distance increases in New York and New Jersey. http://www.newnetworks.com/VerizonATTincreases.htm C) The Failure of Lifeline Service Lifeline is a service that was supposed to be designed to help those who need assistance to pay for their phone service. See: The Nationwide Support information, part of the Universal Service Fund, website: http://www.Lifelinesupport.org/li/lls/ In our surveys of California, New York, New Jersey, Pennsylvania and other states, we've collected a large number of Lifeline bills, and have done extensive interviews with customers, especially as part of our ongoing telecom auditing services. Lifeline is currently broken, not because customers don't have cell phones. First, while Lifeline pays for some of the customer's service, it does NOT cover making calls, additional services, like call waiting or inside wire maintenance, etc. In short, about 90% of customers have to pay more than Lifeline gives. "Lifeline support enables low-income consumers to save at least $5.25 per month and up to $10.00 per month on their telephone bills. Consumers may also qualify for an additional $3.50 per month in matching support from their state." Also, you can't use your Lifeline service from Verizon with any other carrier's products, totally anti-competitive. http://www22.verizon.com/about/community/nj/tele/Lifeline.html "Restrictions: Communications Lifeline Service is limited to one service per qualified customer. Also, Communications Lifeline participants can only purchase Verizon's optional safety/privacy services such as Call Trace, Caller ID, Caller ID With Name, Call Block, Non-published listing or a Wire Maintenance Program." Some Verizon states, such as Pennsylvania, even block the customer from getting many of these services. "You cannot have: http://www22.verizon.com/about/community/pa/lowincome/pa_lowincome.html Next, Lifeline doesn't include long distance service, and, as previously discussed, the costs have skyrocketed over the last few years. But the most galling part is that the phone companies get compensated for Lifeline they are paid their full, inflated retail rates. "Lifeline reimburses telephone companies for discounting consumers' monthly phone bills". Finally, outreach and signing up for Lifeline has previously been a problem, though some states have gotten better at it. In order to get Lifeline you have to be 135% below the US poverty line, so it is not for those with the means to afford phone service. Thus, Lifeline has not been successful in most states. It is still expensive, it doesn't cover most services, and it is hasn't been properly marketed in many states. See some more Lifeline information from our previous studies. http://www.newnetworks.com/lifeline.htm D) The Failure of the Report's Data and Analysis. The Report has many conclusions that can not be justified through their lax data collection and analysis. 1) The authors never talked to actual Lifeline or low income families to find out why the number of subscribers has been shrinking. Worse, if the study is about people who are less likely to have phones, how can you do a phone survey to get the response of "why low income families don't have phone service?" -- Obviously, anyone called already bought into the need for a phone. The study states: "This new study on cell phone usage in America is based on two new surveys-a scientific national sampling of 1005 households by ORC and a statistically large online sampling of 110,000 TracFone prepaid phone users. While the study examines all cell phone owners, the focus is primarily on benefits to those in the bottom two quintiles of household income (less than $35,000), who are much less likely to own cell phones." 2) Failure to examine costs of wireline or wireless or actual examination of the Lifeline costs. "However effective Lifeline and Link-Up programs may or may not be, it's clear that neither program is currently effective in stemming the disconnection tide that is contributing to one of the lowest phone penetration rates in the developed world." If you don't examine the actual reasons that these programs are not effective, such as the actual costs of service, how can you claim that now giving customers 'cell phones' would make any difference? For example, in our previous California survey we found that the average one-line wireless account, (based on 125 bills), was more than double the wireline service, (based on 125 bills). Is the Report suggesting we double the amount given to the customers for USF charges, thus doubling the current costs to customers? Or if you supply only a portion of the wireless bill for Lifeline, does the author think that it will not harm the customer?
3) Economic Gains From Cell Phones - With Mismatched Data. The report claims that having a cell phone will help make the low income person more money. "More than three quarters of those polled by ORC use their cell phones to discuss work or money, and nearly a third of those working say their cell >phone has helped them make money, get new work or customers. Far more respondents in blue collar jobs say their cell phone has gotten them work or money (40%) than those in white collar professions (27%)" But those who don't have cell phones seem to be mostly seniors as they are the ones who today don't have cell phones. "Those who do not now own a cell phone tend to be older (37% are retired), less educated (29% have a high school education or less; 25% have some college but not completed), low income (38% make less than $35,000 a year) or unemployed (30%). This suggests that a significant minority of Americans who are most in need are not benefiting from the economic gains that other Americans attribute to their cell phones." If you cross reference the information you have mostly seniors, who are also low income, who are mostly unemployed, and who are less educated. And since seniors are 'retired' they most likely don't need a cell phone for business or new jobs, thus, there is no need for work or money discussions. The report does not supply a Venn diagram removing "seniors" from this information so as to separate it from, say, low income families. In short, the report does not reflect an unknown group of anything. But when you start stripping away various parts of this discussion, there numbers get even more confusing. In the opening quote "The Sullivan report concludes that providing cell phones to the 38 percent of Americas 45 million poorest households now without them…" There are 110 million homes, so according to this, 41% of America is a "poorest home" - Next, the 38% of 45 million would yield 17.1 million households. Of the poorest, according to US Census, over 7 million households receive additional Social Security funding, which include aged and persons with disabilities. Thus, the multiplication of potential new revenues and monies drops by over 40%. With a clear picture of who needs cell phones, the thought experiment falls apart. 4) The FCC Data Quoted is Unreliable at Best. The report's analysis is based on FCC phone subscribers' data. Teletruth has filed multiple complaints against the FCC's data and analysis, and, as many readers know, the FCC's broadband data was shown to be unreliable from the GAO. Even Congress has chimed in on the inadequacies of the data. The FCC's own subscriber ship data from its most recent report "Telephone Subscriber ship In The United States, (Data Through November 2007)" states it can't be used for an accurate assessment of previous reports because various data sources do not agree. "Unfortunately, the results of the CPS cannot be directly compared with the penetration figures contained in the 1980, 1990, and 2000 decennial censuses. This is due to differences in sampling techniques and survey methodologies and because of differences in the context in which the questions were asked. For example, the 2000 decennial census reported 97.6% of all occupied housing units in the United States had telephone service available, whereas the CPS data showed a penetration rate of 94.6% of households for March 2000." Other FCC Data Caveats. These are the numbers for Households over $150,000.
Unit = household, Avail= has access. In a bit over a year, black families with over $150,000 income went up from 94.7 to 98.3 household subscribership. (A lot of black hip hop artists having a big year?). Worse, only 97.7% of households with over $150,000 had phone service in 2006 rising to 99% in 2007. Also, the ending of all of the numbers in 2007 is ".3", thus rounding is off, while the numbers for Black and Hispanic avails and units are the same, which is improbable at best. Besides the sudden rush for wealthily families to get phone service, unless they are Amish who live without phones, live in rural America where they can't get phone service for some reason, or have decided not to interact with the rest of the world, these numbers can't be even close to accurate without a wide margin of error. Even wealthy seniors living in a retirement home have phone service access. To see our collection of Data Quality Act Complaints against the FCC's data. http://www.newnetworks.com/Teletruthdataqualityfilings.htm 5) Emergency Service Analysis Is Flawed. The report claims that most people favor cell phones in an emergency situation: "Another dominant finding is that super majorities from every demographic segment say the cell phone is "extremely important" for "emergency use," and overwhelmingly prefer a cell phone to a landline phone as a security blanket. Nearly half of respondents (48%) in the ORC survey have used their phone to call or text during an emergency situation, a fifth (20%) have received an emergency call or text on their cell phone, and nearly a third (32%) have bought a cell phone for a relative to use in emergency situations. By more than a 3-1 ratio, Americans say they prefer a cell phone to a landline phone for emergency use." And the reason it gives includes everything from being locked the in trunk of a car to being on the 911 plane headed for the World Trade Center. "When it comes to citizen safety and cell phones, the presumption is that cell phones provide people with a way to communicate if stranded or hurt, or to report a crime in progress. People anywhere under emergency duress of any kind-even stuffed in the trunk of a car-can call 911 for help. The particular value of the cell phone in this context was fully realized during the 9/11 attacks, when cell phones not only allowed people to say their last goodbyes, but more likely than not prevented a second plane from hitting a key target in Washington, D.C., as passengers aboard Flight 93 learned from the ground about the other planes hitting the World Trade Center." The truth of the matter is --- Cell phones do not supply the location of the caller. Wireline phone service comes with E911 that gives the actual address of the caller, not only a voice conversation. Cell phones, for the most part, do not have global positioning software (GPS). More to the point, the FCC made all VOIP companies who offer wireline service to create special attention for E911 service. But the kicker is - One of the main suppliers of the data is TracFone, and their terms and conditions specifically states that in case of an emergency, find a wireline phone. "Do not rely solely on your TRACFONE in an emergency situation. In an emergency, locate the nearest landline phone and call for help." We are not arguing that cell phone use for emergency calling, especially outside the home, is useful. However, there is little data on the topic of number of calls from cell phones (not at home) with wireline calls. Some sources put the number of wireline to wireless as even, though different sections of the same state can have higher or lower wireline amounts. If the author is pursuing the safety issue, of course, they should be wondering where all of the monies collected for E911 go, and why the cell phone companies haven't installed GPS systems for wireless calling. 6) Wireline Is More Useful for Online Services. The author assumed that wireless services should be replaced for wireline service but misses a critical point - many other studies show that having online services, especially email or the ability to browse the web, is a excellent business and work tool. Obviously, cell phone services can't match this additional work and money enhancement. Also, there are over 6 million disabled people in the US, many of whom also use other devices to interact, such as TRS or Relay Services. 7) The Report Primary Finding is Questionable at Best. "In the much larger (albeit non-scientific) Tracfone survey, where 30% of working households (not retired, student, unemployed) attributed gains to their cell phones, the average annual gain cited was a much higher $2,361 per household. (Respondents were asked to quantify sums up to $10,000 and above.)" If we were to ask someone from a working household ---Did it help having a phone for getting work, what do you think they'd say, especially if they are younger and use it for business? The report doesn't provide any data wireline phones. Maybe they should have asked "If you didn't have any phone would you lose money and not have a job?" 8) 3rd World Developing Nations and Cell Phone Data Is Used for a Fully Deployed Wireline Public Switched Telephone Network. The author's assumptions seem to be based on other cultures where there is no implemented infrastructure, so cell phones have taken predominance, because it is cheaper to deploy. US wireline service, however, is ubiquitous today and cost less money, as it has been funded through the local rates over a century, with Universal Service as being a mandatory principle. "Most of the recent studies on the impact of cell phones on poor populations have focused on the developing world, where the sales growth and penetration increase have been exponential and dramatic, and where the vast majority of the world's poor reside." CONCLUSION: We are not arguing that a low income person may need mobility or a cell phone may be an asset for some calls, but the reality is, the report doesn't prove that point. And it certainly doesn't understand the US markets pertaining to Lifeline or the cost of service. If the report was serious it should say -- Lifeline is inadequate because of a failure to make it easy to get and because it does not cover the basic phone costs, much less long distance. Instead of giving more money to the cell phone companies, AT&T, Verizon and Tracfone. Congress should start by fixing Lifeline by surveying actual Lifeline customers and those who no longer can afford phone service. Get the Money back from Rate Gouging and Harvesting: The mergers were supposed to lower phone rates, yet AT&T and MCI have been gouging customers. If New Millennium wants to help low income families, they should suggest getting the money that the telcos been gouged based on the failure to have serious competition -- Billions per year annually. |